COMPANY REPORTS

COMPANY REPORTS;GTE and BellSouth Report Strong Net Income Results

By Bloomberg Business News

Published: July 18, 1996

The GTE Corporation and the BellSouth Corporation, two of the nation's local phone companies, posted strong second-quarter earnings results yesterday, mostly because of higher demand for second phone lines in American homes and an increase in sales of new services. GTE's earnings rose 10 percent, matching estimates, as the company increased phone lines by 7 percent and simultaneously posted initial success in the long-distance phone market. The combination resulted in the largest revenue increase in more than four years at GTE.

Profit at BellSouth, a Baby Bell, rose 13 percent, for its best quarter ever, fueled by a record increase in phone lines partly because of demand for communications services for the 1996 Summer Olympics in Atlanta. The phone companies "are turning up the marketing engine to sell and promote enhanced products," said Brian Adamik, an analyst at the Yankee Group, the Boston-based market research firm. "And consumers are signing up for additional lines in their homes."

GTE, based in Stamford, Conn., said net income rose to $642 million, or 66 cents a share, from $581 million, or 60 cents, a year ago. Revenue climbed 7.3 percent, to $5.29 billion from $4.93 billion. Earnings were in line with the average estimate of 66 cents a share from 13 analysts surveyed by IBES International Inc.

GTE's stock fell $1.75, to $41.25, in trading of 2.35 million shares, more than twice its three-month daily average. The shares fell because investors were expecting GTE to exceed forecasts. The number of phone lines GTE operates rose by 7 percent in the second quarter, compared with an industry average increase of about 4 percent to 5 percent. Minutes of use, or volume, on its local phone network rose 10 percent.

GTE improved its productivity by 16 percent. The company said it now has 305 phone lines per employee -- a key measurement in the local phone industry -- up from 264 a year ago. It still lags behind the industry leader, Ameritech, which has 372 phone lines per employee.

BellSouth posted second-quarter net income of $629 million, or 63 cents a share, compared with a net loss of $2.177 billion a year ago, due to the discontinuance of SFAS No.71 and $16 million from extinguishment of debt.Revenue rose 5.2 percent, to $4.62 billion from $4.39 billion. Wall Street was expecting BellSouth to earn 62 cents a share, based on a survey of 16 analysts by IBES International Inc. BellSouth's stock fell 50 cents, to $41.50, in yesterday's trading of 1.42 million shares.